Close

Cart

Total $0.00

Checkout

ALISO VIEJO, Calif., Feb. 21, 2017  -- Sunstone Hotel Investors, Inc. (the "Company" or "Sunstone") (NYSE: SHO) today announced results for the fourth quarter and year ended December 31, 2016.

Fourth Quarter 2016 Operational Results (as compared to Fourth Quarter 2015):

  • Net income decreased 85.6% to $34.3 million.
  • Income attributable to common stockholders per diluted share decreased 87.5% to $0.14.
  • Comparable Portfolio Hotel RevPAR increased 0.4% to $153.33.
  • Total Portfolio Hotel RevPAR increased 1.6% to $155.34.
  • Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net decreased 80 basis points to 28.8%. Excluding the impact related to the end of the ground rent abatement at the Hilton San Diego Bayfront, Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net would have decreased by 30 basis points.
  • Adjusted EBITDA decreased 2.4% to $79.1 million.
  • Adjusted FFO attributable to common stockholders per diluted share decreased 3.3% to $0.29.

Full Year 2016 Operational Results (as compared to Full Year 2015):

  • Net income decreased 60.4% to $140.7 million.
  • Income attributable to common stockholders per diluted share decreased 66.0% to $0.55.
  • Comparable Portfolio Hotel RevPAR increased 1.3% to $163.75.
  • Total Portfolio Hotel RevPAR increased 0.7% to $164.22.
  • Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net decreased 30 basis points to 30.5%. Excluding the impact related to the end of the ground rent abatement at the Hilton San Diego Bayfront, Comparable Hotel Adjusted EBITDA Margin, excluding prior year property tax adjustments, net would have increased by 20 basis points.
  • Adjusted EBITDA decreased 6.1% to $330.0 million.
  • Adjusted FFO attributable to common stockholders per diluted share decreased 7.6% to $1.21.

John Arabia, President and Chief Executive Officer, stated, "During the quarter, transient demand and rates increased relative to the prior year, group attendance was healthy relative to its historic norms, and group spend on banquets and audio visual demonstrated strength. These better-than-anticipated top line results, coupled with energy, overhead and property tax savings, resulted in portfolio and company profits well ahead of our expectations." Mr. Arabia continued, "Following the recent sale of the Fairmont Newport Beach, as well as other recent capital transactions, we have significant liquidity and are pursuing the acquisition of quality hotels that satisfy our long-term return requirements. At the same time, we expect to continue to capital recycle various assets within our portfolio, including legacy assets that no longer meet our investment criteria or hotels  in which we believe we can harvest at a material premium to our internal valuation."

UNAUDITED SELECTED STATISTICAL AND FINANCIAL DATA
($ in millions, except RevPAR, ADR and per share amounts)

       
 

Three Months Ended December 31,

 

Year Ended December 31,

 

2016

 

2015

 

Change

 

 

2016

 

 

2015

   

Change

                                   

Net Income

$

34.3

 

$

237.6

 

(85.6)

%

 

$

140.7

 

$

355.5

 

(60.4)

%

Income Attributable to Common Stockholders per Diluted Share

$

0.14

 

$

1.12

 

(87.5)

%

 

$

0.55

 

$

1.62

 

(66.0)

%

                                   

Total Portfolio Hotel RevPAR

$

155.34

 

$

152.85

 

1.6

%

 

$

164.22

 

$

163.03

 

0.7

%

Total Portfolio Hotel RevPAR, excluding the Wailea Beach Resort

$

151.77

 

$

150.88

 

0.6

%

 

$

162.50

 

$

160.22

 

1.4

%

Comparable Portfolio Hotel RevPAR

$

153.33

 

$

152.69

 

0.4

%

 

$

163.75

 

$

161.59

 

1.3

%

                                   

Comparable Portfolio Hotel Occupancy

 

78.1

%

 

78.3

%

(20)

bps

   

82.4

%

 

82.3

%

10

bps

Comparable Portfolio Hotel ADR

$

196.32

 

$

195.01

 

0.7

%

 

$

198.73

 

$

196.34

 

1.2

%

                                   

Comparable Portfolio Hotel Adjusted EBITDA Margin

 

28.8

%

 

29.6

%

(80)

bps

   

30.5

%

 

30.8

%

(30)

bps

                                   

Adjusted EBITDA

$

79.1

 

$

81.1

 

(2.4)

%

 

$

330.0

 

$

351.3

 

(6.1)

%

Adjusted FFO Attributable to Common Stockholders

$

62.2

 

$

62.3

 

(0.2)

%

 

$

260.8

 

$

271.7

 

(4.0)

%

Adjusted FFO Attributable to Common Stockholders per Diluted Share

$

0.29

 

$

0.30

 

(3.3)

%

 

$

1.21

 

$

1.31

 

(7.6)

%

                                                           

 

Disclosures regarding the non-GAAP financial measures in this release are included on pages 5 through 7. Reconciliations of non-GAAP financial measures to the most comparable GAAP measure for each of the periods presented are included on pages 10 through 14 of this release. Comparable Hotel Adjusted EBITDA Margin excludes prior year property tax adjustments, net.

The Company's actual results for the quarter and year ended December 31, 2016 compare to its guidance originally provided as follows:

             

Metric

 

Quarter Ended
December 31, 2016
Guidance (1)

 

Quarter Ended
December 31, 2016
Actual Results
(unaudited)

 

Performance Relative
to Prior
Guidance Midpoint

Net Income ($ millions)

 

$16  to  $20

 

$34

 

+ $16

Total Portfolio Hotel RevPAR Growth

 

- 2.0%   to   0.0%

 

1.6%

 

+ 2.6%

Total Portfolio Hotel RevPAR Growth, excluding Wailea Beach Resort (2)

 

- 2.5%  to  - 0.5%

 

0.6%

 

+ 2.1%

Adjusted EBITDA ($ millions)

 

$69  to  $73

 

$79

 

+ $8

Adjusted FFO Attributable to Common Stockholders ($ millions)

 

$52  to  $56

 

$62

 

+ $8

Adjusted FFO Attributable to Common Stockholders per Diluted Share

 

$0.24  to  $0.26

 

$0.29

 

+ $0.04

Diluted Weighted Average Shares Outstanding

 

215,800,000

 

216,600,000

 

+ 800,000

             

Metric

 

Full Year 2016
Guidance (1)

 

Full Year 2016 Actual
Results (unaudited
except Net Income)

 

Performance Relative
to Adjusted Prior
Guidance Midpoint

Net Income ($ millions)

 

$123  to  $127

 

$141

 

+ $16

Total Portfolio Hotel RevPAR Growth

 

  - 0.5%  to  + 0.5%

 

0.7%

 

+ 0.7%

Total Portfolio Hotel RevPAR Growth, excluding Wailea Beach Resort (2)

 

+ 0.5%  to  + 1.5%

 

1.4%

 

+ 0.4%

Adjusted EBITDA ($ millions)

 

$320  to  $324

 

$330

 

+ $8

Adjusted FFO Attributable to Common Stockholders ($ millions)

 

$250  to  $254

 

$261

 

+ $9

Adjusted FFO Attributable to Common Stockholders per Diluted Share

 

$1.16  to  $1.18

 

$1.21

 

+ $0.04

Diluted Weighted Average Shares Outstanding

 

215,000,000

 

215,200,000

 

+ 200,000

     

(1)  Represents guidance presented on November 1, 2016.

(2) Excludes the Wailea Beach Resort due to the hotel's repositioning during 2016.

 

Recent Developments

On January 10, 2017, the Company received proceeds of $240.0 million from the private placement of senior unsecured notes. The private placement consisted of $120.0 million of notes bearing interest at a fixed rate of 4.69%, maturing in January 2026, and $120.0 million of notes bearing interest at a fixed rate of 4.79%, maturing in January 2028.

On January 11, 2017, the Company used proceeds received from its private placement of senior unsecured notes to repay the loan secured by the Marriott Boston Long Wharf, which had a balance of $176.0 million and a fixed rate of 5.58%. The Marriott Boston Long Wharf loan was scheduled to mature in April 2017, and was available to be repaid without penalty in January 2017. Following the repayment of the loan secured by the Marriott Boston Long Wharf in January 2017, the Company currently has 22 unencumbered hotels.

On February 10, 2017, the Company sold the 444-room Fairmont Newport Beach, California for a gross sales price of $125.0 million. The hotel was classified as held for sale as of December 31, 2016, but did not qualify as a discontinued operation as the sale did not represent a strategic shift that had a major impact on the Company's business plan or its primary markets.

On February 17, 2017, the Company's Board of Directors authorized an increase to the current share repurchase program to acquire up to $300.0 million of the Company's common and preferred stock. Future purchases will depend on various factors, including the Company's capital needs as well as the price of the Company's common and preferred stock.

Balance Sheet/Liquidity Update

As of December 31, 2016, the Company had $437.5 million of cash and cash equivalents, including restricted cash of $67.9 million. Adjusting for the significant cash transactions that occurred in January 2017, including the $119.8 million payment of the Company's common and preferred dividends, the funding of $240.0 million in unsecured senior notes and the $176.0 million repayment of the mortgage secured by the Marriott Boston Long Wharf, total pro forma cash including restricted cash as of December 31, 2016 would be $381.7 million.

As of December 31, 2016, the Company had total assets of $3.7 billion, including $3.2 billion of net investments in hotel properties, total consolidated debt of $0.9 billion and stockholders' equity of $2.5 billion.

In December 2016, the Company issued 3,564,047 shares of its common stock for gross proceeds of $55.1 million. The shares were issued in connection with an "At the Market" program pursuant to Equity Distribution Agreements ("ATM Agreements"), which the Company entered into during 2014 with Wells Fargo Securities, LLC and Merrill Lynch Pierce, Fenner & Smith Incorporated. Under the ATM Agreements, the Company is authorized to issue common stock having an aggregate offering amount of up to $150.0 million. As of December 31, 2016, the Company had $73.3 million available for sale under the ATM Agreements.

The Company intends to enter into new ATM Agreements during the first quarter of 2017, increasing its authorization to issue common stock to an aggregate offering amount of up to $300.0 million

Bryan Giglia, Chief Financial Officer, stated "Our Board recently increased the Company's share repurchase authorization and ATM authorization in order to provide the Company with the incremental tools to manage the business and to increase our optionality in a volatile environment.  Given our significant cash position and investment capacity, we are well positioned to take advantage of various opportunities." 

Capital Improvements

The Company invested $42.3 million and $182.2 million into capital improvements of its portfolio during the three months and year ended December 31, 2016, respectively. During the fourth quarter 2016, the Company incurred total revenue displacement of approximately $1.5 million at the Wailea Beach Resort. In 2017, the Company expects to invest approximately $125 million to $140 million into its portfolio, which includes the final payments for the Wailea Beach Resort repositioning completed at the end of 2016.

2017 Outlook

The Company's achievement of the anticipated results is subject to risks and uncertainties, including those disclosed in the Company's filings with the Securities and Exchange Commission. The Company's guidance does not take into account the impact of any unanticipated developments in its business or changes in its operating environment, nor does it take into account any unannounced hotel acquisitions, dispositions, re-brandings, management changes, transition costs, severance costs associated with restructuring hotel services, early lease termination costs, prior year property tax assessments or credits, debt repurchases/repayments, perpetual preferred redemptions or unannounced financings during 2017.

For the first quarter of 2017, the Company expects:

     

Metric

 

Quarter Ended  
March 31, 2017 
Guidance (1)

Net Income ($ millions)

 

$54  to  $57

Total Portfolio Hotel RevPAR Growth

 

+ 2.5% to + 4.5%

Adjusted EBITDA ($ millions)

 

$61  to  $64

Adjusted FFO Attributable to Common Stockholders ($ millions)

 

$43  to  $46

Adjusted FFO Attributable to Common Stockholders per Diluted Share

 

$0.19  to  $0.21

Diluted Weighted Average Shares Outstanding

 

219,600,000

 

For the full year of 2017, the Company expects:

     

Metric

 

Full Year 2017
Guidance (1)

Net Income ($ millions)

 

$150 to  $174

Total Portfolio Hotel RevPAR Growth

 

+ 0.5% to + 3.5%

Adjusted EBITDA ($ millions)

 

$306  to  $330

Adjusted FFO Attributable to Common Stockholders ($ millions)

 

$239  to  $263

Adjusted FFO Attributable to Common Stockholders per Diluted Share

 

$1.09  to  $1.19

Diluted Weighted Average Shares Outstanding

 

219,800,000

   

(1)

See pages 12 and 13 for detailed reconciliations of Net Income to non-GAAP financial measures.

 

First quarter and full year 2017 guidance are based in part on the following assumptions:

  • Full year Total Portfolio Hotel RevPAR guidance is benefiting 150 to 200 basis points from the completed repositioning at the Wailea Beach Resort.
  • Full year Hotel Adjusted EBITDA Margin change of approximately - 25 to + 50 basis points.
  • Full year corporate overhead expense (excluding deferred stock amortization and one-time expenses related to any acquisition closing costs) of approximately $19.5 million to $20.5 million.
  • Full year amortization of deferred stock compensation expense of approximately $8.3 million.
  • Full year interest expense of approximately $48.0 million to $48.3 million, including approximately $2.3 million in amortization of deferred financing fees and excluding approximately $1.4 million of capital lease obligation interest.
  • Full year total preferred dividends of $12.8 million, which includes the Series E and Series F cumulative redeemable preferred stock.

To view full financial release and corresponding tables please click the PDF icon or visit:
http://phx.corporate-ir.net/phoenix.zhtml?c=181566&p=irol-news&nyo=0

About Sunstone Hotel Investors

Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ("REIT") that as of February 21, 2017 has interests in 27 hotels comprised of 13,225 rooms. Sunstone's hotels are primarily in the urban and resort upper upscale segment and are operated under nationally recognized brands, such as Marriott, Hilton and Hyatt. For further information, please visit Sunstone's website at www.sunstonehotels.com.

Sunstone's mission is to create meaningful value for our stockholders by producing superior long-term returns through the ownership of long-term relevant lodging real estate. Our values include transparency, trust, ethical conduct, honest communication and discipline. As demand for lodging generally fluctuates with the overall economy, we seek to own hotels that will maintain a high appeal with travelers over long periods of time and will generate economic earnings materially in excess of recurring capital requirements.

Contact: Bryan Giglia

(949) 382-3036

Related News

Q2 2017 Financial Reports Round Up - Part 3: Choice, Chesapeake, Chatham, Sunstone & ESA

Sunstone Hotel Investors Acquires the Recently Opened 175-Room Oceans Edge Hotel & Marina Key West, Florida for $175 Million

Sunstone Hotel Investors Reports a Q1 2017 Net Income Increase of 5,148.9% to $63.8 Million Due to Gain on Sale of Fairmont Newport Beach

Park Hotels & Resorts Inc. Reports Q4 2016 Net Income of $17 Million, a Decrease of 75.4%; Pro-forma RevPAR Down 0.8%

Hospitality Properties Trust Reports Fourth Quarter Net Income of $58 Million Compared to a Net Loss of $24.7 Million in the Year Ago Quarter

Xenia Hotels & Resorts Reports Q4 2016 Net Income of $48.8 Million, Down from $61.8 Million; Same-Property RevPAR Decreased 4.2% Compared to Q4 2015

Extended Stay America Reports Q4 2016 Net Income of $30.1 Million, Down from $132.1 Million; RevPAR Up 4.1% for the Quarter

Belmond Ltd. Reports 2016 Net Earnings of $36.3 Million for the Year, up $20 Million from 2015; RevPAR Down 7% in Q4 but up 3% for the Full Year

Ryman Hospitality Reports Q4 2016 Net Income Increase of 24% to $48.1 Million and a 43% Rise to $159.4 Million for the Year Over 2015 Periods

Ashford Hospitality Trust Reports Q4 2016 Net Loss of $57.3 Million; Comparable RevPAR for all Hotels not Under Renovation Increased 3.2% During the Quarter

Summit Hotel Properties Reports Q4 2016 Net Income Fell to $3.3 Million, Compared with $80 Million in 2015; Pro Forma RevPAR Increased 1% in Q4

Pebblebrook Hotel Trust Reports 2016 Yearly Net Income of $74 Million, Down from $95 Million; Yearly RevPAR Grew 2.4%

FelCor Reports Q4 2016 Net Loss of $6.2 Million versus $10.4 Million in Q4 2015; Same-Store RevPAR Decreased 2.0%

Chatham Lodging Trust Reports Q4 Net Income Decline of $1.8 Million to $2.7 Million; Portfolio RevPAR Down Slightly at 0.8%

RLJ Lodging Trust Reports Q4 & Full Year 2016 Results: Q4 Net Income Increased 2.0% to $75.8 Million; Pro Forma RevPAR Down 0.3%

Chesapeake Lodging Trust Reports Decrease in Q4 Net Income and RevPAR Growth

LaSalle Hotel Properties Reports Q4 2016 Net Income of $21.3 Million, Down from $23.5 Million in Q4 2015; RevPAR Up 2.5%

Hersha Hospitality Trust Reports Full-Year and Q4 2016 Results: FY RevPAR Grew 2.1% with a Q4 Rise of 0.3%

AccorHotels Reports Strong Earnings Growth in 2016; Outlines New Platform on AccorInvest

Host Hotels & Resorts, Inc. Reports RevPAR Increase of 1.7% in Q4 2016; Net Income Dropped $37 Million for the Quarter

All News »

Please login or register to post a comment.